The Coronavirus pandemic has dragged the UK economy to it’s knees forcing many businesses to close; some even permanently. Whilst the government has offered various support schemes and grants to help keep UK businesses afloat HMRC are not happy. The rapidly changing situation has left them struggling to keep up with businesses’ finances and distinguish those who genuinely need extra support and those who are claiming grants that they are not entitled to.
It therefore only makes sense that they are keen to get back investigating to attempt to recover money lost through fraud. Whilst investigation didn’t stop during lockdown, it dropped massively. In April 2020 HMRC announced a suspension of many investigations due to the pandemic in order to utilise its resources for the Coronavirus Job Retention Scheme. (CJRS) For example, in May 2020 HMRC opened only 10,000 investigations as oppose to 31,000 the previous May. The decision was also made in April to suspend some investigations so that it could put its effort into supporting Coronavirus Job Retention Scheme (CJRS)
This meant that debt owed to HMRC tripled from £19.3bn in 2019 to £65.5bn due to the coronavirus pandemic. And, to top this off, with the various new schemes that have been implemented come various new types of fraud for which HMRC also have to try and prevent.
It’s no wonder they aren’t happy.
Pressure is on HMRC to deal with fraud and tax underpayments quickly in order to recover debt that it’s owed to them.
So, what does this mean for me?
We already know that HMRC is looking into claims made for the SEISS grants; an email was sent in February to a number of self-employed people requesting that they provide proof that they are eligible to claim the SEISS grants or to repay grants that they have claimed but were not entitled to. The consequence of ignoring this email would be refusal of any further SEISS grants and possibly a tax enquiry against you.
And, in December 2020, HMRC warned that it was preparing to crackdown on Covid-19 related fraud with around 4,000 ongoing investigations into companies and 27,000 cases involving high risks of furlough fraud. The government also estimated that up to 10% of the furlough money could have been wrongly allocated; amounting to as much as £3.5bn.
It is, therefore, safe to assume that if there are any irregularities in your accounts; particularly in your claims for any coronavirus support schemes, you could fall under HMRC’s radar for a tax investigation.
If you need any help with your tax investigation, You Know It Makes Sense to get in touch with us today!